Define: Divergence

UK Accounting Glossary

Definition: Divergence



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Full Definition of Divergence


Divergence occurs when the trend of price doesn’t follow the trend of its indicator.

Traders make transaction decisions by identifying situations of divergence, where the price of a stock and a set of relevant indicators, such as the On-Balance-Volume, are moving in opposite directions.

Bullish divergence:  the indicator is making a new high while the price does not.

Bearish divergence: the indicator is making a new low while the price does not.


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Definition Sources


Definitions for Divergence are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 23rd March 2020.